What to do if I can't trust myself with monthly wages?

Question

I work in the UK, like most people here I get paid once a month.

I've been doing this for about 2 years now (on a modest income) and my ability to make the money last has not gotten better (if anything it has gotten worse). I feel like if I could just get a bi-weekly wage like people in the US then I'd be able to sort myself out, a weekly wage would be perfect, I would do anything to have that instead. I honestly think it's cruel to give someone a monthly wage when they're as irresponsible as me, it's like giving 10 kilos of cocaine to a coke addict. Not a single month have I been able to make my money last all the way to the end. I'm constantly taking payday loans, borrowing off friends, etc. By the time payday comes, I've already dug myself a hole which makes the payday-prosperity far less significant.

Is there any way I can turn my monthly salary into 2 halves or 4 quarters? Is there a service designed for people of my 'disposition'?

Edit: in response to all the negative comments I need to point out some things:

1) Yes, I am sure I'll be better financially by having more granular wages. I have had jobs in the past which paid weekly, on a much lower salary than what I have now, and I always made it work without having to borrow anything.

2) I've already asked my employer about getting more frequent pay (would have thought that was obvious)

3) I know I need to improve my budgeting, but that's a lesson for another day. Right now I'm only concerned about receiving my money in a way that won't allow me to go nuts every time I get paid, I feel the main problem for me is the excitement that arises from a 180-degree shift in finance (yesterday I was starving, but today I'm a king) when I have that mentality, all my logic and reasoning and education that I receive from you guys goes out the window.

Answer 1

Not sure if you can do this at your bank, but here's how I would do it at mine:

• Set up 2 accounts - an account with limited access (do not order checks or an ATM/debit card) and a second checking account
• Have your paycheck deposited to the first account
• Have all periodic bills (rent, utilities, insurance, etc.) auto-withdrawn from the first account.
• Set up periodic (weekly?) transfers to the second account for discretionary spending

If you can't get a similar setup at your bank, you can always just withdraw cash weekly to use for your discretionary spending, but obviously that limits what you can do online.

Now, that helps the mechanical part of budgeting - you now have a consistent weekly "income" to budget against. But that's only half of the battle.

The next step would be to do an actual budget. List your expenses in order of priority (food, housing, utilities, transportation, etc.) and when you run out of money, STOP. No more payday loans, no more borrowing from friends, just stop spending. If you've prioritized properly then the only things left should be luxuries that you can do without (or emergencies, which are covered below).

The next step is to build a small emergency fund to help with the things that are true emergencies that cannot be cash-flowed. That way, when you miss something in your budget you don't have to borrow money to cover it.

You're going to get it horribly wrong for the first few months, and it will get less wrong over time, but you should start to get a handle on what you're spending your money on and get to a point where you can reduce unnecessary expenses (like loan interest), and start saving money instead.

Answer 2

Sort of a strange answer here, my apologies:

If we extrapolate your problem to its extreme, you spend all of your money as soon as you are paid, you can't make rent or pay bills, you are evicted, and you lose your job, and you are homeless. That is one of the many ways that people become homeless.

It is possible for people who are homeless to change their lives and become homeowners again - I've seen it happen via social welfare programs in the United States. There are two primary ingredients for that process: 1) temporary financial assistance, 2) temporary case management.

Case management is basically a kind of therapy for how you earn and spend money, how you interact with the government (e.g., paying taxes and registering a car, etc.), and how you interact with others (effective resume/CV writing, job interviews, etc.).

That is all to explain (and perhaps justify) my suggestion of therapy. You are being your own worst enemy (as so many of us are). You're not fighting your own interests in the areas of love or family or substance abuse, but in the area of money management. There are probably some emotional reasons why you are not able to control your spending, and getting to the bottom of those and working on them is the only permanent, long term solution.

In addition, more along the lines of this Stack, some financial management tricks should help (as the other existing answer outlines), but they might only delay the inevitable, if you're not able to start to exert some self-control without therapy.

Answer 3

Nobody minds if you pay bills early

For people struggling, it often does not occur to them what happens if you pay the electric company 3 months worth. They think some clerk steals the extra and next month the bill is due again. No.

Actually, the electric company carries the extra on your account as a credit balance. Next month's bill comes, but it simply reduces the credit balance, and so the bill shows you owe 0, shows a balance of a negative number, the bill has a red stamp "Do not pay" and they don't include a return envelope.

The upshot is that it totally works to overpay or prepay; the money is still yours and you will still get full value for it.

This does not work on revolving credit, which is to say, credit cards.

My gas company charges annoying surcharges for every payment method except check, so I pay them $400 and they leave me alone for a whole year.

So pay your bills first thing.

The instant you get your check, bang off checks for this month's rent, expected utilities, all of life's necessities that you can possibly prepay. Pay enough extra that it's covered for sure so you don't have to follow up with a £2.16 extra payment.

Groceries? Gift card. Eating out? Gift card. Retirement? Pay it immediately, no wobbling. Saving up emergency fund? Prepay it.

Since these are things you genuinely do need and will definitely buy, you are effectively "paying yourself first", a core principle in financial competence and creating wealth.

With all your genuine needs paid up...

Don't borrow

All remaining cash is the month's fun money. If you want it to last til the 3rd, drown yourself in blackjack and hookers. Or make it last longer, your call.

Live with your choice.

Regardless, don't go "oh, I need more party money" because that's silly.

Notice that since all your necessities have been paid, you are unable to say "I need more for necessities" . That was the point of paying your necessities up front.

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Edit: the main problem for me is the excitement that arises from a 180-degree shift in finance (yesterday I was starving, but today I'm a king) when I have that mentality, all my logic and reasoning and education that I receive from you guys goes out the window.

By the way, that is the crux of your problem, and that is a financial-education problem. As a result of education I do not have that feeling at all. I see my finances not as a "right now, devil may care about tomorrow" planning window, but "now and future money is all my money, and looking a couple years out, I want to maximize its usefulness to me." So for instance when a shiny new cell phone comes along, I ask a lot of questions about total life-cycle cost of ownership. When a paycheck arrives, I am "meh, whatever" because I see my money as being continuously earned, not a periodic event.

Answer 4

Envelopes

Get yourself at least 5 Envelopes and a nice marker. Mark four of the envelopes Week 1, Week 2, etc. The 5th envelope mark Bills. When you get your paycheck, figure out what the bills for the month will be, put that money in the Bills envelope and don't touch that except to pay for bills. Whatever money is left, split it into quarters and put it in the four weekly envelopes. Now take the money from Week 1 and put it in your wallet. Don't touch the contents of the other weeks until the appropriate Monday. Only take the money out of the Bills to actually pay the bills. Try very very hard not to take "loans" from future weeks; If you are forced to make sure when you start that week that you remind yourself (and act accordingly) that "this week" is going to be slim because you overspent the previous one.

You could apply additional granularity and have an envelope each for Rent, Utilities (Or even separate envelopes for each of those). You might also want to make a Luxury Envelope and/or a Savings Envelope.

Budgeting is hard, but a desire to gain control of your finances is the first step... And being frugal now can lead to less need to be desperately frugal later (especially if you end up owing interest for loans, or selling items "at a loss" just to make enough cash to eat.)

Answer 5

I am horrendous with money, and while I have managed to avoid payday loans and borrowing from friends - I have repeatedly been in a no-savings and no-money at the end of the month situation.

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What worked for me, was to:

Pay myself a daily allowance

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Instead of trying to account for the future - where you're guessing how you might need the money, and whether you can make it last. I recommend setting aside all of the money at the start of the month - and then only allowing yourself to spend the proportion of the month you've already passed.

That is, if you have £900 after bills*, you have:

£30 per day

No more, and no less.

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Every day, you take that money out in cash - or some other form that allows you to easily differentiate it from your "not actually mine yet" money. You can spend it on what you like each day, or save it up for something big at the end of the week; but you absolutely never spend more than what you've drawn out.

This works on two levels:

• If you want something big, say a £300 phone - you save for 10 days (or whatever it works out for you), and then buy it on the 10th day. You will not be able to overspend.

• If you spend too much and can't afford food - at worst, you wait one day and spend the entire next day's budget on food. You will not be at risk of going hungry by the end of the month.

Of course, it takes will power. There always will be the tempatation to "just spend tomorrow's money, because I'll be good" - but it's a much smaller temptation than seeing a single large number in the bank account and figuring it can't hurt to spend a little more.

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* Importantly, as all other answers have noted - you must pay bills before anything else. The minute you get your pay, ensure all of your bills and subscriptions are paid straight away - everything that's left, should be money you're safe to spend. I'd also suggest counting savings as a bill, that needs deposited in a non-withdraw account, and as such does not sit tempting you through the month.

Answer 6

I struggled with money for most of my life. Now, at almost 40, I finally have a real handle on things, but that is the result of 15+ years of "not spending" as well as recently getting a hefty boost to my income.

The first thing I would suggest is to get the book "America's Cheapest Family". I've read it multiple times to figure out ways to help my own financial problems.
https://www.amazon.com/Americas-Cheapest-Family-Right-Money/dp/0307339459

Even though you work in the UK, there are massive amounts of information, tips, tricks, and ideas in this book that aren't specific to the USA. Most of them show you ways to curb spending or to spend in ways that actually work for you, instead of against you.

This family has helped themselves get out of debt as well as people from all over get their finances straight. They did it IRL before they put together the book, so they know what they're doing.

The second thing I would suggest is to stop all spending that isn't absolutely necessary. Drop the coffee shop coffee and switch to instant, walk short distances instead of driving/bus/train/etc., buy groceries instead of eating out, and there are more examples than I'm willing to list. These are all in the book above, but this'll help get you started as you read the book.

Next, set up that budget D Stanley mentioned. I used spreadsheets (Microsoft, LibreOffice, Google Sheets to name a few) to keep track of who I owed, how much total I owed each creditor, how much monthly minimums were, when the bill is due, and much more. Within each spreadsheet, I had tabs for each month, so I could track my yearly expenses and see where (all) my money went.

I don't agree (with D Stanley or the book) that having multiple accounts will make a difference, but it can help for some people. The book offers the suggestion that simply having "accounts" on paper, but not real accounts in the bank, do the same thing. I didn't bother with it, since the budget was enough for me.

There are accounting agencies around that might be able to help you manage your money, but they are likely to cost you more than you can afford, since you are apparently already spending more money than you make.

Also, stop getting the payday loans! The fees they are charging you can sometimes equate to a 1200% yearly interest rate, depending on the company. These companies survive on keeping/making people come back. I ended up having to use one of these companies, but only once for an emergency. You will also need to stop borrowing from friends and family, eventually, but soon. If you can't bring yourself to spend only the money you have, you should shoulder this lack of funds yourself, not spread it to the people you enjoy having in your life. Eventually, they may kick you out of their life because of it. They likely can't afford to pay your bills along with their own bills.

The last option I'm going to suggest is to get a better paying job. That might not happen right away. Depending on your experience, your education level, your industry, and your attitude (introvert vs extrovert), you might not be able to get a better paying job for a couple years. If that's the case, you can always talk to your manager about an internal move within your company or simply a raise.

All of this takes time, so be patient. It also takes time to learn the ways that work for your instance. Try different ways to save/"not spend" and see what works vs. what isn't sustainable. Every situation is different.

Good luck!

Answer 7

I'm assuming you're not intentionally self-sabotaging and you're not stupid. After all, you've recognised the problem and are trying to solve it. You probably just have poor impulse-control. The solution to that is to inconvenience the unwanted behaviour so much that it becomes enough work you bypass the "impulse" part and have to actually think about it.

Something to consider is that there's no organisational or legal hiccup to be had in multiple banks.

In your case, I'd use the two bank accounts to partition myself. In computer-terms, it's something like having an Admin account and a day-to-day account.

You know how much you should be getting each month, and with a little estimation you know how much you need to spend. So set up one account as your income account. Your job pays that account, and your bills come out of it. And once a week, it transfers a sensible sum of money automatically into the second account.

You leave any cards for that first account in a box-file at home, accessible when you need it but out of sight and out of mind during the day.

The second account is your day-to-day account and you keep its card on your person for whatever you need/want to spend money on.

This system guarantees you cannot overspend because you only have access to a safe part of your money at any given time.

Where it gets awkward is dealing with food-money. Food is one of the easiest things to overspend on in my lifestyle, my impulse-control sucks when it comes to ordering takeout and dining out. it's just easier than cooking. The problem is that it's about four or five times as expensive as buying the ingredients and making the food myself each evening.

To fit food into the two-account system, you may want to get a third card, dealing with a third account which serves purely as a food-money repository. This is stocked with enough money for typical shopping habits, nothing extravagant, but enough to see you through each month/week.

If you want takeout or to eat out, spend it from your Fun-Fund, because it certainly qualifies!

Alternately, take your Utilities card when you plan to go shopping and account for food as a utility.

The plan takes a bit of organisation, but the discipline is largely self-enforcing. To do anything to break it, you have to physically get up and go find the box-file with the utilities card. Or at least make a conscious decision to use that card when you know you shouldn't.

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Another thing you can do is once a month build yourself a spreadsheet containing all your income and outgoings for the past 3 - 6 months. Compare your habits, breakdown the purchases for this particular month by type.

I've found that doing this (I'm not remotely consistent about how often!) invariably gives me a solid sense of where I'm overspending and I tend to cut back for a few weeks before slipping again. do it often enough and it'll keep me on the level :P

Answer 8

Limiting your access to the funds is probably your easiest solution if self control is the problem. If your bank will allow you to have two debit accounts this is easy. Here's how I did it (I was paid monthly when I set this up, so I know your pain!): Figure out how much your monthly bills are, add some savings (5% at least), then divide up the rest into weekly auto-transfer jobs to move from your main bank account with direct deposit into another account that can be used for buying food, fun, clothes, etc. Borrow from savings instead of getting payday loans, if it comes to that.

Answer 9

To add to the other answers, if you are currently feeding any addictions with your income (chemical, entertainment, etc.), then you need to address those as well. Left unchecked they will gradually consume more and more of your income until they leave you homeless (I know this sounds like an exaggeration, but addiction is a common cause of homelessness), especially when friends and family stop lending money. If this is not the case in your situation, that's good--it's one less problem you have to deal with, but I wanted to include it for completeness and for anyone who is in this situation.

Answer 10

By asking this question, you already recognize there is an issue and it will be easier for you to proceed.

You need to learn self control and regulate. Be firm and decisive with yourself, don't give in to urges or whims.

Seek advice from professional credit counselors.

Credit counseling is often free of charge or cheap, so get in touch with them immediately.

They will offer tactics and behavior analysis as well as recommendations on how to conduct yourself.

Also, reflect on what you purchase and the reasons for buying. Are you possibly addicted to shopping or simply spend money frivolously while it lasts?

The best discipline advice won't stick if there is an underlying problem in your psyche or emotional well being.

Those would then need to be addressed to fix your problem once and for all.

If you find you can't do this on your own or with friends and family, seek help from a psychologist.

Find information / books on money management.

DON'T get caught up in self help cults !

Answer 11

I'll approach the question in a slightly different way, some will say I am not answering the question but my idea will solve your problem, to a large degree.

First of all, contact all your creditors and ask if you can pay by direct debit (or standing order) on the day you get paid. So you will now be in a situation where all of your bills (at least all that can be paid this way) leave your account on payday, so you cannot spend that money.

Now you will have a problem budgeting for things like food, petrol etc as these things cannot be paid for monthly.

What you could do here is have a prepayment card (or two) where you can load money, you could have one for fuel and one for food. You would need a budget to know how much to put onto each and that could again be done on payday, you would need to make sure you only spend x amount per week/day etc. For fuel it's not really a problem but for food it might be so you need to be disciplined here, make meal plans and stick to them, that will help you spend less. What you could do is do a meal plan for a week at a time and order the ingredients required online, so you know exaclty what you are spending.

Any money left in your account after payday, is yours to spend as you see fit, obviously try to spend it gradually over the month if you can!